The following consolidated statements of operations and balance sheets reflect
the impact of the settlement. The $50 million settlement, recorded in selling,
general and administrative expenses, increased the third quarter and
year-to-date net loss by $32 million, or $0.04 per share. The settlement is
reflected within the Corporate and Other group.
AT&T CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
-------------------------- ----------------------------
2004 2003 2004 2003
-------------------------- ----------------------------
(Dollars in millions, except per share amounts)
Revenue $ 7,638 $ 8,649 $ 23,264 $ 26,430
Operating Expenses
Access and other connection 2,411 2,785 7,530 8,191
Costs of services and products 1,783 1,954 5,406 5,923
Selling, general and administrative 1,653 1,793 5,160 5,551
Depreciation and amortization 647 1,224 3,128 3,607
Asset impairment and net restructuring and other charges 12,469 64 12,736 134
---------- ---------- ---------- ----------
Total operating expenses 18,963 7,820 33,960 23,406
---------- ---------- ---------- ----------
Operating (Loss) Income (11,325) 829 (10,696) 3,024
Other (expense) income, net (34) (7) (172) 89
Interest (expense) (192) (289) (611) (917)
---------- ---------- ---------- ---------
(Loss) Income Before Income Taxes, Minority Interest
Income, Net Earnings (Losses) Related to Equity Investments
and Cumulative Effect of Accounting Changes (11,551) 533 (11,479) 2,196
Benefit (provision) for income taxes 4,402 (72) 4,741 (677)
Minority interest income - - 1 1
Net earnings (losses) related to equity investments 2 (3) 2 3
---------- ---------- ---------- ----------
(Loss) Income from Continuing Operations (7,147) 458 (6,735) 1,523
Net (loss) from discontinued operations [net of income taxes of $0] - (13) - (13)
---------- ---------- ---------- ----------
(Loss) Income before Cumulative Effect of Accounting Changes (7,147) 445 (6,735) 1,510
Cumulative effect of accounting changes [net of income taxes of $17
and $(9)] - (27) - 15
---------- ---------- ---------- ----------
Net (Loss) Income $(7,147) $ 418 $ (6,735) $ 1,525
========== ========== ========== ==========
Weighted-Average Shares Used to Compute Earnings Per Share:
Basic 795 789 794 787
Diluted 795 791 794 788
Per Basic Share:
(Loss) earnings from continuing operations $ (8.99) $ 0.58 $ (8.48) $ 1.94
(Loss) from discontinued operations - (0.02) - (0.02)
Cumulative effect of accounting change - (0.03) - 0.02
---------- ---------- ---------- ---------
(Loss) Earnings Per Basic Share $ (8.99) $ 0.53 $ (8.48) $ 1.94
========== ========== ========== =========
Per Diluted Share:
(Loss) earnings from continuing operations $ (8.99) $ 0.58 $ (8.48) $ 1.93
(Loss) from discontinued operations - (0.02) - (0.01)
Cumulative effect of accounting change - (0.03) - 0.02
---------- ---------- ---------- ---------
(Loss) Earnings Per Diluted Share $ (8.99) $ 0.53 $ (8.48) $ 1.94
========== ========== ========== =========
Dividends Declared per Common Share $0.2375 $ 0.2375 $ 0.7125 $ 0.6125
========== ========== ========== =========
AT&T CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
At At
September 30, December 31,
2004 2003
------------- ------------
(Dollars in millions)
Assets
Cash and cash equivalents $ 2,627 $ 4,353
Accounts receivable, less allowances of $589 and $579 3,516 4,036
Deferred income taxes 1,116 715
Other current assets 1,328 744
----------- ------------
Total Current Assets 8,587 9,848
Property, plant and equipment, net of accumulated depreciation of $1,155 and $34,300 11,654 24,376
Goodwill 4,778 4,801
Other purchased intangible assets, net of accumulated amortization of $396 and $320 394 499
Prepaid pension costs 3,939 3,861
Other assets 2,707 4,603
----------- ------------
Total Assets $ 32,059 $ 47,988
=========== ============
Liabilities
Accounts payable and accrued expenses $ 2,586 $ 3,256
Compensation and benefit-related liabilities 2,215 1,783
Debt maturing within one year 1,582 1,343
Other current liabilities 2,346 2,501
----------- ------------
Total Current Liabilities 8,729 8,883
Long-term debt 8,881 13,066
Long-term compensation and benefit-related liabilities 3,947 3,528
Deferred income taxes 1,138 5,395
Other long-term liabilities and deferred credits 2,929 3,160
----------- ------------
Total Liabilities 25,624 34,032
Shareowners' Equity
Common stock, $1 par value, authorized 2,500,000,000 shares; issued and
outstanding 795,590,783 shares (net of 171,983,367 treasury shares) at
September 30, 2004 791,911,022 shares (net of 172,179,303 treasury shares)
at December 31, 2003 796 792
Additional paid-in capital 27,287 27,722
Accumulated deficit (21,446) (14,707)
Accumulated other comprehensive (loss) income (202) 149
----------- ------------
Total Shareowners' Equity 6,435 13,956
----------- ------------
Total Liabilities and Shareowners' Equity $ 32,059 $ 47,988
=========== ============